American Technology stock drops as it raises $14 million

SABRE SPRINGS —— Shares of American Technology Corp. fell nearly
10 percent Monday after the company announced that it had raised
$14 million from institutional investors. The acoustical
electronics maker had earlier this month canceled a stock offering
that had been expected to raise up to $25 million.

The money-losing company sold about 2.9 million shares to
investors at $4.88 per share, along with warrants to buy an
additional 1.58 million shares. Shares closed at $5.57, down 60
cents for the day. American Technology plans to use the $14 million
to deliver, market and sell audio equipment, including products
based on its HyperSonic Sound technology, which creates audible
sound from ultrasound.

The company has gained widespread attention for its technology,
developed by prolific North County inventor and Chief Executive
Officer Elwood "Woody" Norris. His claims to fame include an
in-the-ear cell phone speaker and microphone for cell phones, the
Jabra Earphone, as well as a precursor to the sonogram. Norris is
the 2005 winner of the Lemelson-MIT Prize, given to those whose
inventions have improved human life.

HyperSonic Sound creates audible sound from the interaction of
ultrasonic waves. These waves can be aimed much like a beam of
light. Sound can be "shined" on a wall or appear to emanate from
the air. The company has sold the devices for purposes such as
beaming directed advertising messages to supermarket shoppers and
for military communications. In a $4.9 million deal, the Army
bought the company's "Long Range Acoustical Devices," or LRADs, for
use in Iraq.

However, turning the technology from concept to product has
taken many years, while the company has operated in the red. It
also faces competition from Audio Spotlight, a company with a
similar technology. Revenues from sales have not covered expenses,
and American Technology has periodically had to raise more
money.

Profiles of American Technology in publications such as Newsweek
or USA Today have generally praised the technology, but pointed out
the company's weak financial situation. As of March 31, the company
reported an accumulated deficit of $45 million, along with expected
losses for the rest of its fiscal year.

In December, American Technology announced a deal with
Kingsbridge Capital Limited under which Kingsbridge would provide
up to $25 million in financing during the next two years. Under the
deal, Kingsbridge would buy nearly 4 million shares of common stock
that the company would issue. Kingsbridge would then be able to
sell the stock in a public offering, under a registration statement
with the Securities and Exchange Commission filed Jan. 24.

American Technology withdrew its registration statement in a
July 1 filing with the SEC, stating that the statement was "no
longer consistent with its financial plans."